CFPB Sanctioned By Federal Judge After Engaging in Funny Business During DiscoveryAugust 26, 2017 | By: Sean Murray
When the CFPB was asked to support their claims in a brutal lawsuit they had brought against several payment processors, they balked and stonewalled. Eventually, the judge had enough.
On Friday, US District Judge Richard W. Story granted sanctions against the Consumer Financial Protection Bureau (CFPB) for misconduct in discovery and dismissed their case against several payment processors entirely. The CFPB had accused defendants Global Payments, Pathfinder, Frontline and EMS of providing substantial assistance to deceptive conduct carried out by debt collectors.
During discovery, the CFPB attempted to block their own representatives from being deposed in any capacity. The Court disagreed and ordered the depositions to proceed. Rather than comply, the CFPB asked for a protective order to block questioning on topics relevant to their claims. The court mostly denied it, ordering that the defendants were entitled to question the CFPB about the factual underpinnings of its allegations against them.
Apparently determined to undermine the process further, the CFPB produced a witness for a deposition who relied almost entirely on “memory aids,” which in one case was a 200+ page document that the witness merely read aloud verbatim when asked questions.
In a Court conference call conducted in April, defendants complained that the CFPB’s “memory aids” were merely lengthy prepared scripts.
And this was not really a memory aid. This was a script. The witness simply read answers. He did not sort of use it as a refresher of his memory. And frequently the witness would not answer the question asked. But you would ask the witness for the factual basis for something, especially outside Global’s knowledge, and he would read, in one instance for an hour, about things that had nothing to do with Global’s knowledge.
The tactics continued throughout, according to the defendants.
[…] I could be wrong on this Your Honor, but it’s quite possible that in the seven hours yesterday there was no human touch; everything was read. And when anything was asked that would be, well, what facts do you have to support that, it was either met with objection, work product, don’t answer; or the witness would just read lengthy narratives, often that were nonresponsive, that sometimes went as long as 45 minutes and often an hour.
Incredulous that the CFPB refused to answer questions at all costs, the judge ordered sanctions against the CFPB and dismissed the case on the basis that they had failed to produce a knowledgeable witness, made improper objections during depositions, and willfully violated the Court’s repeated instructions.
“In light of the CFPB’s pattern of conduct in this case, the Court is not optimistic that reopening the depositions would be fruitful,” the judge said.
The case is Consumer Financial Protection Bureau v. Universal Debt Solutions, LLC, et al. in the Northern District of Georgia, Atlanta Division, Action 1:115-CV-859-RWS.August 26, 2017
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.